Tax and financial advice from the Silicon Valley expert.

Tax deadline extended, but not really

You have probably heard the deadline for filing 2020 income tax returns was extended to May 17, 2021. (IR-2021-59, March 17, 2021.)

The relief provided by this announcement by the IRS is very limited. It only applies to the filing and payment date for 2020 individual income tax returns. (Incidentally, the announcement also extends the date for making 2020 individual retirement account (IRA) contributions, which is the same as the filing date.) The filing due dates for income tax returns for estates, trusts, partnerships, corporations and S corporations haven’t been extended.

Most significantly for individuals who are small business owners and investors, the extension doesn’t apply to the first estimated tax payment for 2021, which is still due on April 15, 2021. Most people who make estimated tax payments base them on the previous year’s income tax return, so you still need to know what it is or guess high.

Also, all of the states haven’t announced that they will conform to the May 17 date. (California has.) The state income tax return in many states starts with the information on the Federal income tax return.

The American Institute of Certified Pubic Accountants is asking the IRS and representatives in Congress that all 2020 tax filing and 2021 initial estimated tax deadlines be extended to June 15, 2021, so, even at March 29, we still might not have the last word about when tax season will end.

Tax and financial advice from the Silicon Valley expert.